EXPERT INSIGHTS AND RELIABLE INFORMATION FOR THE AVIATION INDUSTRY 28th Annual Commercial Aviation Industry Suppliers Conference March 3-5, 2014 AIRCRAFT DELIVERY AND RETIREMENT FORECASTS PRESENTED BY: AL WANG SENIOR MANAGER, FORECASTING & MARKET PLANNING Proceedings Sponsored by:
Airline Industry and Forecast Update Pratt & Whitney SpeedNews Aviation Industry Suppliers Conference March 2014 Pratt & Whitney Proprietary This document is the property of United Technologies Corporation (UTC). You may not possess, use, copy or disclose this document or any information in it, for any purpose, including without limitation to design, manufacture or repair parts, or obtain FAA or other government approval to do so, without UTC s express written permission. Neither receipt nor possession of this document alone, from any source, constitutes such permission. Possession, use, copying or disclosure by anyone without UTC s express written permission is not authorized and may result in criminal and/ or civil liability. Mar 2014 1
World GDP 2.7% growth between 2008-2017 90 80 70 60 50 40 30 20 10 0 ($2010, Trillions) 63 62 2 2 2 2 2 2 5 5 5 6 5 17 16 17 17 17 18 18 19 19 20 5 21 20 20 21 21 21 21 22 22 23 17 17 19 19 20 21 22 23 24 26 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2 6 64 66 68 69 72 74 2 3 6 77 2 3 6 80 2 3 6 Source: Global Insight 2/14 Africa Mideast L. America N. America Europe Asia/Pac 2008 2017 CAGR 1997 2007 CAGR 4.2% 4.7% 3.8% 3.0% 3.0% 2.9% 2.0% 3.2% 1.0% 5.0% 4.8% 4.9% Mar 2014 2
(% CAGR, 2008 2013) 8.3% GDP Growth By Aggregate CAGR since 2008 6.2% 4.9% 1.5% 1.2% 2.8% 0.7% 2.7% 2.0% 0.4% Source: Global Insight 2/14 Mar 2014 3
OECD Business Leading Indicators (Composite Leading Indicators Index) 104 Jan-2013 103 Jan-2014 Long term trend = 103 102 101 99 98 101 99 99 101 98 99 102 99 101 99 99 98 99 98 99 99 101 102 99 99 102 99 101 97 96 95 *Nov. 2013 **Dec 2013 Source: Organization for Economic Co operation and Development (OECD) Mar 2014 4
World Unemployment Rates For December 2013 30 25 Unemployment Rate (%) 25.8 20 15 15.4 12.7 12.1 10.8 10.7 10.1 10.1 10 8.4 8.0 7.6 7.0 6.9 6.7 5 5.8 5.8 5.2 5.1 4.8 3.7 3.0 0 YOY Change 0.4% 2.0% 1.3% 1.9% 0.1% 0.1% 0.3% 0.4% 0.5% 0.0% 0.4% 1.2% 0.4% 1.1% 0.4% 1.0% 0.4% 0.3% 0.2% 0.6% 0.0% Source: Organization for Economic Co operation and Development (OECD) Mar 2014 5
Airline Association Traffic Reports Steady traffic growth 20% 15% (% change year over year) Association of Asia Pacific Airlines (AAPA) Association of European Airlines (AEA) Association of Latin American Airlines (ALTA) U.S. Airlines For America (A4A) Arab Air Carriers Association 10% 5% 0% 5% Mar 2014 6
Load Factors Mixed picture in 2013 5 4 3 2 1 0 1 2 3 4 (Y O Y change in load factor (percentage points) Association of Asia Pacific Airlines (AAPA) Association of European Airlines (AEA) Association of Latin American Airlines (ALTA) U.S. Airlines For America (A4A) Mar 2014 7
U.S. Carrier Yields Pacific yields continue to struggle 15% 10% 5% (% change yield ( /RPM)) Domestic Atlantic Latin Pacific 0% 5% 10% 15% Source: Participating A4A carriers Mar 2014 8
Oil and Jet Fuel Pricing History Fuel prices relatively stable 150 ($/barrel) 140 130 120 110 90 80 70 Jet fuel Brent Oil Y O Y $126 5% $110 4% 60 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Data through 24 Feb. 2014 Source: EIA Mar 2014 9
2013 Net Results ($M) Another banner year for North America AMERICAS ASIA/PAC EU/ME/AFR AEROMEXICO AIR CANADA* AIR TRANSAT^^^ ALASKA* ALLEGIANT AMERICAN* COPA DELTA* ($500) $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $(57) $85 $309 $383 $92 $1,164 $428 $2,699 AIRASIA** AIRASIA X ANZ^ ASIANA GARUDA ($1,000) ($500) $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 388 28 150 105 11 ($1,000) ($500) $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 AER LINGUS AEROFLOT 47 311 AIR FRANCE* 478 COMAIR^ CROATIA 23 0 EASYJET^^ 642 HAWAIIAN JETBLUE REPUBLIC SKYWEST $47 $168 $27 $59 MAS QANTAS^ 373 5 ETHIOPIAN^ FINNAIR JAZEERA 108 15 59 SOUTHWEST* $804 SHANDONG 108 NORWEGIAN 41 SPIRIT* UAL/CAL* US AIR* VOLARIS* $28 $178 $787 $1,084 THAI V AUSTRALIA^ 392 101 SAS THOMAS COOK^^ TNT 339 168 28 WESTJET $261 XIAMEN 245 TUI^^ 103 *Excluding non recurring and non cash items **Operating result ***FY thru March 2014 ^FY through June 2013 ^^FY through September 2013 Mar 2014 10
Cumulative Industry Profits Back in the black $60,000 (Cumulative Net Profit ($M)) $54,461 $50,000 $40,000 $30,000 $20,000 $10,000 $0 -$10,000 -$20,000 Source: ATA/IATA/ICAO Mar 2014 11
Scheduled Capacity By Airline Region 3.8% CAGR since 2008 (ASKs, Billions) 5847 5733 168 288 173 300 402 473 1814 1704 6130 190 336 549 1756 6528 6734 194 196 378 362 619 691 7048 202 402 778 1788 1783 1812 Africa Mideast L. America 2008 2013 CAGR 3.7% 6.9% 14.1% 1631 1548 1637 1756 1774 1813 1713 1709 1851 2003 2108 2243 N. America Europe Asia/Pac 0.0% 2.1% 5.5% 2008 2009 2010 2011 2012 2013 Note: Includes only scheduled passenger mainline and regional operations Source: OAG FEB 2014 Mar 2014 12
Scheduled Capacity By Airline Type Growth inversely proportional to size (ASKs, Billions) 5955 5854 35 29 838 839 6240 37 953 6623 1053 1106 1210 1742 1771 1919 2092 2202 2327 43 6827 47 7140 51 Regional Low Cost 2008 2013 CAGR 8.0% 7.6% 3340 3215 3332 3436 3472 3552 Small/Med Network Large Network 6.0% 1.2% 2008 2009 2010 2011 2012 2013 Note: Includes only scheduled passenger mainline and regional operations Source: OAG FEB 2014 Mar 2014 13
LCC Capacity By Region Asia is catching up to NA and Europe (ASKs, Billions) 830 830 39 86 10 52 136 146 941 11 18 74 178 307 297 328 1042 11 19 89 1098 22 8 89 214 237 1203 27 7 101 289 351 368 392 Africa Mideast L. America Asia/Pac 2008 2013 CAGR 2.9% 33.3% 20.7% 16.3% 342 324 343 369 382 395 2008 2009 2010 2011 2012 2013 Note: Includes only scheduled passenger mainline and regional operations Source: OAG FEB 2014 Europe N. America 5.0% 2.9% Mar 2014 14
Backlog Summary 10,910 passenger aircraft total, >95 seats Single Aisle 8,490 a/c Widebody 2,420 a/c 737MAX 1639 19% C919 350 4% MC21 225 3% CS 201 2% E JET/E2 134 2% A320NEO 2505 30% A330 232 9% A380 124 5% 787 888 37% A350 813 34% 737NG 1742 20% A320 1679 20% 767 1 0% 747 8 26 1% 777 336 14% Source: AVWIN/FLEETPC Mar 2014 15
18,000 16,000 14,000 12,000 (# Aircraft, >95 seats) Active Fleet Backlog Backlog History 12953 12435 11028 11353 12052 11509 Backlog catching up to fleet 17088 15666 16279 14948 14364 13800 13920 +3.7% 10,000 8,000 6,000 4,000 2,000 2701 2382 2517 2535 3540 4466 6034 7006 6316 6409 7656 8363 8853 +10.4% 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: AVWIN/FLEETPC Mar 2014 16
2013 World Traffic Outlook 7.9% 6.6% 5.6% 5.0% 5.8% 6.6% 6.4% 5.3% 5.1% 4.6% 2.2% -3.1% 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2014-2033 January 2014 P&W estimate < Mar 2014 17
Aircraft Delivery Forecast Summary 34,230 Total Commercial Passenger Aircraft, 2014-2033 MED/LONG-RANGE 24% 221 280 1400 4% 281 375 4950 14% >375 1250 4% 70 95 3070 9% 96 115 3005 9% 116 135 3350 10% 176 220 5715 17% SHORT-RANGE 76% 136 175 11490 33% Commercial passenger aircraft including regional jets; excludes freighters, business jet variants, and turboprops Mar 2014 18
Deliveries By Region, 2014 2033 L. AMERICA 2430 7% MIDEAST 2965 9% CIS 2110 6% AFRICA 1175 3% ASIA/PAC 12285 36% N. AMERICA 6270 18% EUROPE 7000 21% Commercial passenger aircraft including regional jets; excludes freighters, business jet variants, and turboprops Mar 2014 19
Summary U.S. E.U. REST OF WORLD AIRLINES FORECASTS Mar 2014 20
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